Sibos Preview: SWIFT Readies Quick FIX

SWIFT's light-order entry system will allow smaller banks and buy-side firms to participate in global, real-time, electronic trading using the FIX protocol.

SWIFT (La Hulpe, Belgium), an industry-owned cooperative supplying messaging services and interface software to financial services firms, intends to release a light-order entry system for FIX services by the end of the summer. The service should be in operation with actual customers well before Sibos, SWIFT's annual conference, taking place this year in Atlanta from October 11 to 15.

The FIX protocol supports communication between buy-side and sell-side securities firms and investment managers, including pre-trade messages, indications of interest and trade messages. Typically, in order to exchange FIX messages with other counterparties, firms use a FIX engine, which is software designed to format, send and receive FIX-formatted messages. A FIX network acting as a message hub brokers those messages between trading partners.

SWIFT is changing the game on two fronts. First, SWIFT offers a FIX message hub over its IP-based network, SWIFTNet FIN. As a result, the potential trading partners for FIX transactions will include virtually every entity with a SWIFTNet connection.

Secondly, firms that use SWIFT's light-order entry system over SWIFTNet FIN will no longer require a specialized FIX engine in order to get started. "It gives firms who don't have a FIX engine and an order management system -- but are connected to SWIFTNet -- the ability to bring up a browser-based application to receive and send FIX messages with trading partners," says Matt Fox, SWIFT's New York-based FIX Program Manager. "You're on SWIFT, you flip the switch, up comes the browser-based system, you enter a user name and password, and away you go."

The target market includes small and medium-size buy-side firms and banks for which the price points were too high to justify a FIX engine along with the accompanying support, according to Fox. "This gives them a real easy way to get in and start trading with broker-dealers on the network today," he says.

Along with its light-order entry system, SWIFT is also encouraging the adoption of FIX 4.4, the latest version of the standard promulgated by FIX Protocol Ltd. (FPL), a Bermuda-based standards body. The new version of FIX includes added support for fixed-income trading and for confirmations on the post-trade allocation of block trades.

Also by the end of the summer, SWIFT will release its automated certification tool for firms connecting to SWIFTNet for the purpose of using the FIX protocol. The current certification process requires having a customer service representative from SWIFT on the telephone. "It's very thorough and it works well, but it's very operationally intensive for us," says Fox. "It limits the number of total tests that can be done in a reasonable amount of time."

By contrast, the new "Autocert" capability will have a testing script that leads a customer's IT staff through the testing process, which involves sending and receiving messages of various types. "We're taking a large percentage of the tests and automating them through an application that the customer will have on premise," says Fox. "It will instruct them on how to do things, score them on how they complete the tests, and then give them a report."